monitoring is costly governance is imperfect. If managerial hedging is detected, shareholders can seize the payoffs of the … manager’s trades. We show that at the optimal contract: (i) the manager’s portfolio is monitored only when the firm performs … poorly, (ii) the more costly monitoring is, the more sensitive is the manager’s compensation to firm performance, and (iii …

conventional contract theory. Our three key insights are: First, inequity aversion plays a crucial role in the design of optimal …

This paper analyses bargaining over an incentive compatible contract in a moral hazard framework. We introduce the … bargaining power, the contract in the Kalai-Smorodinsky solution yields a more efficient outcome and induces more effort. The …

A manufacturer’s incentives to undertake non-contractible investments depend on the profit margin on her sales to the … retailer, and slotting allowances can facilitate such incentives by increasing unit wholesale prices. At first glance, it is …

model where a representative firm chooses its level of monitoring activities. A stricter workfare policy raises employment … and monitoring activities. It typically increases profits and reduces the tax rate. The impact on the net wage isambiguous …

monitoring and sanctions restores search incentives most effectively, since it brings additional incentives to search actively so … of improving the efficiency of UI: the duration of benefit payments, monitoring in conjunction with sanctions, and … monitoring and sanctions than in the other two systems. Workfare appears to be inferior to the other two systems. …

This paper extends the Mirrlees (1971) model of optimal non-linear income taxation with a monitoring technology that … the joint determination of the non-linear monitoring and tax schedules and the conditions under which these can be … implemented. Monitoring of labor effort reduces the distortions created by income taxation and raises optimal marginal tax rates …

sanctions insured unemployed whose effort is deemed insufficient. The model reveals that such schemes provide incentives to the … unemployed to front-load search effort prior to monitoring. This causes the job finding rate to increase above the post sanction …